Use our DSCR Loan Calculator to help illustrate eligibility requirements for a Debt Service Coverage Ratio (DSCR) loan—no income or employment information required. You can calculate both purchase and refinance scenarios, including cash-out refinances.
Minimum credit score to qualify is 640. Please adjust your selection to continue.
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Loan Amount must be at least $100,000
Newfi offers financing options for DSCR ratios of 0.8 and above.
Based on your scenario we couldn't find a match for a Newfi DSCR loan program. Please adjust your credit score, rental purchase price, amount owed and/or LTV and try again.
Newfi’s DSCR loans support loan amounts up to $2,500,000, regardless of your purchase price. Please contact a loan officer to explore custom solutions.
Cash-out is not available when DSCR is below 1.0. Try adjusting rent, loan amount, or expenses.
Current LTV exceeds the max allowed for this loan amount.
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The figures displayed are for illustrative and informational purposes only and are based on the information you provide. This calculator uses program guidelines to estimate your loan-to-value (LTV), down payment, potential loan amount, and Debt Service Coverage Ratio (DSCR). These results are not a credit decision and do not guarantee loan qualification or approval. This is not an offer to lend. Loan eligibility is based on several factors, including credit profile, DSCR, property value, loan amount, and purpose (purchase or refinance). The LTV shown above reflects general program maximums and may be adjusted based on borrower type. An experienced investor is defined as someone who has owned one or more non-owner-occupied investment properties for at least 12 months within the past 36 months. If these criteria are not met, the borrower may be considered a novice investor, and in such cases, the maximum allowable LTV may be reduced by 5%. For a personalized assessment and to explore current loan options, please click “Check Your Eligibility” to connect with a licensed loan officer.
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This DSCR Calculator is designed to illustrate an estimate only and is not a commitment to lend. To receive personalized financing options, reach out to our loan team.
How to Use the DSCR Calculator
This calculator is designed to help you easily model your purchase or refinance scenario and establish the estimated monthly payment on an investment property. Here’s how to use it:
Step 1: Are You Purchasing a New Investment Property or Refinancing an Existing One?
Please choose whether you’re looking to purchase a new rental property or refinance an existing one. The calculator will adjust automatically based on your selection.
Step 2: Customize Loan Terms & Adjust Key Fields
Begin by entering the key figures that will drive your calculation. These manual fields help the calculator determine how much you may qualify for based on Newfi’s DSCR loan guidelines.
- Choose Purchase or Refinance: Indicate whether you’re looking to purchase a new property or refinance a current investment property. This calculation is based on down payment for purchase or loan-to-value (LTV) on refinances.
- Credit Score: Select your estimated credit score. This influences how much you may be able to qualify for, your downpayment on purchases, and the amount of cash-out you may be able to take out if refinancing.
- Purchase Price or Property Value: For purchases, enter the purchase price of your intended investment property. For refinances, enter the estimated home value of your investment property.
- Expected Monthly Rent: Input the expected monthly rent or current rental income the property generates.
- Desired Cash Out Amount: Available for refinance scenarios only. If you don’t wish to take cash out leave this field blank.
Step 3: Customize Loan Terms & Adjust Key Fields
Once you’ve entered your basic property details, the calculator automatically generates estimated loan terms including the DSCR ratio, monthly payment requirement, annual cash flow, gross monthly income, net operating income, CAP rate, and total Loan Amount.
You can also adjust the following fields to fine-tune your scenario:
- Interest Rate
- Loan Term (15-, 20-, 30-, or 40-Years and 30- and 40-Year Interest Only)
- Property Taxes, Hazard Insurance & HOA Dues — This calculator uses national averages as a starting point for these amounts, but you can manually enter local figures for more accurate results.
The loan amount will update in real-time based on your inputs, giving you a more accurate view of how these changes can affect your debt service coverage ratio and annual cash flow.
Step 4: Understand How the Calculator Applies DSCR Guidelines
The calculator uses DSCR loan requirements—such as credit score, loan amount, and loan purpose—to automatically set the maximum loan-to-value.
For example, higher credit scores may make it possible for investors to provide lower down payments on Purchases, while Cash-Out Refinances require a stronger DSCR.
Newfi’s DSCR loans require a debt service coverage ratio of 1.0 to qualify for a Cash-Out Refinance. If your numbers fall outside of program parameters, the calculator will adjust your loan amount to bring the scenario into alignment.
How CAP Rate Helps You Evaluate Investment Opportunities
In addition to DSCR, the Capitalization Rate (CAP Rate) is a helpful metric that investors use to evaluate the income-generating potential of a property. The CAP rate measures the expected return on investment based on a property’s net operating income (NOI) and its current market value.
CAP Rate = Net Operating Income ÷ Property Value
A higher CAP rate generally signals better income potential relative to the cost of the property. While many lenders consider CAP rate when underwriting investment properties, Newfi’s DSCR loans do not require a minimum CAP rate—giving investors more flexibility to pursue a wider range of opportunities.
In the calculator above, you’ll see the CAP rate auto-generate based on your inputs. You can use this figure to help compare multiple properties, understand cash-on-cash returns, and assess whether your target property aligns with your investment goals.
Understanding Debt Service Coverage Ratio
A Debt Service Coverage Ratio is a calculation that mortgage lenders use to determine a property’s ability to generate enough income to cover the monthly mortgage payments.
Newfi’s DSCR Calculator uses this formula:
DSCR = Monthly Rental Income / Monthly Expenses (PITIA or ITIA)
- Monthly Rental Income: This is the total income an investor receives from their tenants each month. This payment should cover the monthly mortgage payment.
- Monthly Expenses: This is the total sum of any monthly fixed costs. This includes principal and interest payments, taxes, insurance, and HOA dues. These expenses are often referred to as PITIA or ITIA (for Interest-Only loan terms).
A DSCR of 1.0 means the property generates just enough income to cover the loan payment. Most lenders require a DSCR of at least 1.0 to 1.25. Some lenders, like Newfi, accept a DSCR as low as .8.
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Why DSCR Loans Are a Game Changer for Real Estate Investors
A DSCR loan provides significant advantages for real estate investors looking to scale their rental property portfolios. Unlike traditional mortgages, DSCR loans focus on property cash flow rather than personal income or employment verification to qualify borrowers.
Key Benefits of DSCR Loans
- Easier Qualifying Requirements: Since income verification isn’t required, real estate investors and self-employed borrowers can qualify based on their property’s rental income alone.
- Flexible Loan Terms: Options for 15-year, 30-year, and 40-year mortgages, including 30- and 40-year interest-only loan term options for borrowers with a minimum credit score of 640.
- Higher Loan Amounts: Investors can borrow up to $2,500,000.
- Maximized Cash Flow: The ability to choose interest-only payments for the first 10 years reduces monthly debt obligations, increasing monthly cash flow.
How DSCR Affects Your Investment Profitability
Net Operating Income (NOI)
Net Operating Income (NOI) represents the total rental income after deducting operating expenses such as property taxes, HOA fees, insurance, and maintenance costs. A higher NOI often results in a stronger debt service coverage ratio, which can make it easier to qualify for financing. Some lenders, like Newfi, do not consider NOI when qualifying borrowers for an investment property mortgage.
Optimizing Your DSCR
Improving your debt service coverage ratio can help you qualify for better loan terms or increase your maximum loan amount. Here are several strategies to help optimize DSCR:
- Increase Rental Income: Boosting your property’s rent directly improves your cash-flow, which strengthens your DSCR. Even small rental increases—especially on multi-unit properties—can make a big difference in your overall calculation.
- Lower Operating Expenses: Reducing costs such as maintenance, insurance, utilities, or property management fees increases your cash-flow and a better NOI. A higher NOI means more cash available to cover debt payments, improving your DSCR.
- Increase Rental Income: Boosting your property’s rent directly improves your cash-flow, which strengthens your DSCR. Even small rental increases—especially on multi-unit properties—can make a big difference in your overall calculation.
- Lower Operating Expenses: Reducing costs such as maintenance, insurance, utilities, or property management fees increases your cash-flow and a better NOI. A higher NOI means more cash available to cover debt payments, improving your DSCR.
- Refinance for a Lower Interest Rate: Lowering your interest rate reduces your total monthly debt service. That means your DSCR improves without needing to change your income or expenses.
- Refinance for Longer Loan Term: Choosing a longer loan term, such as a 40-Year Mortgage, can significantly reduce your monthly payments. Lower payments improve cash-flow and, in turn, raise your DSCR.
- Lower Monthly Mortgage Payments: With Interest-Only (IO) loan terms, borrowers only pay the interest payments on their mortgage for the first 10-years of their mortgage. Because of this repayment structure, these loan terms allow you to lower your monthly mortgage payments and increase cash-flow in the early years of the loan.
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Exploring Interest-Only Loan Terms
Newfi offers multiple Interest-Only loan term that may help investors who are looking to lower their monthly mortgage payment obligation. When using IO loan terms, investors will typically see a higher DSCR, potentially helping you qualify when a fully amortized loan might not.
For Interest-Only DSCR loans, lenders add up the following monthly expenses: Interest + Taxes + Insurance + HOA dues. These monthly expenses are commonly referred to as ITIA. Lenders then divide Monthly Rental Income by ITIA to calculate DSCR.
DSCR = Monthly Rental Income / Monthly Expenses (ITIA)
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Who Should Use a DSCR Loan Calculator?
A DSCR calculator is an essential tool for anyone looking to analyze rental property cash flow and loan payment affordability. Whether you’re an experienced investor or just getting started, this tool helps you:
- Estimate cash flow potential before purchasing an investment property.
- Compare loan terms and interest rates to find the best financing option.
- Determine if you qualify for DSCR financing based on rental income.
- Evaluate whether an interest-only loan is the best option for maximizing returns.
Looking for More Insights and a Full Guide to DSCR Loans?
Check out our DSCR Blogs below!
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